Error of Law: An Exception to the Discoverability Principle?
36 Pages Posted: 21 Mar 2019 Last revised: 20 Jan 2020
Date Written: August 2, 2018
Limitation statutes can become instruments of injustice when they foreclose civil recourse before plaintiffs could reasonably discover their injury. For this reason, reform has swept Canadian provinces to align the commencement of limitation with plaintiffs’ ‘discoverability’ of their claims. Canadian common law nevertheless maintains that discoverability is irrelevant as regards errors of law. The effect of this exception is that limitation periods are not tolled on account of mistake of law, including misjudgments of legal rights or practice, the overruling of precedent, and judicial declarations of void or unconstitutional legislation. Time runs against such actions when plaintiffs suffer loss or damage, not when they discover their error of law.
Canada’s discoverability exception is a problematic doctrine. It appears to resurrect in civil claims the ostensibly defunct fact/law distinction. It stands in stark contrast to modern English precedent on the discoverability of mistakes of law. It controverts the Supreme Court’s claim that discoverability is a ‘general rule’ for the interpretation of limitation periods. And it considerably curtails the reach of the discoverability principle and the potential for plaintiffs laboring under an error of law to benefit from an extended limitation period. In practice, the error-of-law rule may overly curtail rights by protecting those who make legal rules (the Crown and public authorities) and impeding those who have been harmed by unjust laws. This article develops a revised understanding of the error-of-law rule that strikes a better balance between protecting past reliance interests and vindicating plaintiffs’ rightful position.
Keywords: private law, restitution, mistake of law, Limitation Act, limitation postponement, reasonable diligence, Kleinwort Benson, Deutsche Morgan Grenfell, Franked Investment Income Group, Prudential Assurance, Nielsen, Central Trust v Rafuse, Goodswimmer v Canada, Salna v Awad, Canadian Legion Norwood
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